If a buyer assumes a mortgage, how can the seller be relieved of liability?

The correct choice involves the concept of novation, which is a legal mechanism that allows the original party (the seller) to be discharged from their obligations under the mortgage agreement. In this scenario, when a buyer assumes a mortgage, novation allows the seller to transfer their responsibilities to the buyer, effectively releasing the seller from any further liability associated with the mortgage.

This process typically requires the agreement of all parties involved, including the lender, who must consent to the transfer of liability. Once novation occurs, the buyer becomes solely responsible for the mortgage, and the seller is no longer liable for the payments or any potential default, thereby providing a clear resolution to the financial obligations attached to the property.

Other options, while related to property transactions, do not accomplish this specific goal of relieving the seller from liability under the mortgage as effectively. For instance, refinancing generally involves taking out a new loan to pay off the existing mortgage, which may not automatically involve the original seller’s release from liability unless specifically structured that way. A property transfer might not address the underlying mortgage obligations and could leave the seller exposed unless proper legal steps, like novation, are taken. A satisfaction piece refers to a document that confirms the mortgage has been fully paid and is not applicable in